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A $251 Million Typo
theodp writes "A Taiwan stock trader is jobless after a typo left her company looking at a paper loss of more than $12 million when what was supposed to have been a small order mistakenly resulted in a $251 million purchase. 'Something like this is difficult to explain to superiors,' a company exec explained."
She gets fired, and they keep the stock as they expect to profit from it...
Why is she getting fired and not trained?
AXJZTOS
What's even harder to explain is how 1 person from 1 keyboard has the power to kill a company. Do they have to seize the moment that desperately that even a simple check cannot be done?
see a Text Widget
Not necessarily. Professional trading systems often enter in order based on a lot size. You don't generally enter into a system how many shares you want, but how many lots you want. And lot sizes can vary and are often configurable for each terminal or even on a per stock basis. So for instance if you key in 250, if the lot size is 1000, you are actually buying 250x1000, or 250,000 shares. Who knows how the system was configured and if the lot size was displayed prominently in the UI (there are a lot of really bad trading UIs). One thing is for sure. Any competent risk management system would not have caught this.
The systems I have used do confirm your order, but like many such confirmations they're of little value since you reflexively click through them. The real problem is that they let an inexperienced trader trade a huge order. Their systems should have reasonable limits on trades. It is a general problem though because what is reasonable can still be huge. Customers ring up and make $2Bil orders routinely in government bonds and the like.
This actually happened to me once - I bought 100,000 of a derivative instead of 10,000 using an online system. Interestingly the issuer's trader noticed that I had put most of them straight back on the market and rang my broker who rang me and asked me if I wanted to reverse the transaction. Very thoughtful of him...
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if amount > big_number
Its not hard stuff. Most finance companies (from my experience) do have safeguards in place, the fact this one doesn't has done far more than give it a $12m loss, it has warned the market that this company has lax risk controls and higher risk charges should be applied to it.
The trader should get fired, they are employed and payed to do an accurate job. The compliance officer should also get fired, because the buck stops with them.
Mod parent up.
He's dead on.
Not the trader should be fired but the manager who failed to check (or rather: ask someone to check...) their system for fundamental flaws like that.
Typo's happen. Mistakes generally happen when humans are involved.
Critical systems must be designed to deal with that and firing the poor soul who got fucked over by this broken system is not going to fix it.
A simple keyjam can turn 10mio into 1000mio anytime...
How is this even remotely insightful?
Let's see, jump from a claim that this is 'publicity for Merrill Lynch' (WTF!?) to an accusation that this is some massive fraud perpetrated between Fubon and Merrill Lynch (which must be so blindingly obvious to the poster since he/she backs this up with, well, zero facts and much wild speculation).
Then a non-sequitur about Fubon Securities stock rising a miniscule amount.
Then a litany of guilty-by-association links.
Then more wild speculation (Oh, there are books about it! No one who writes a book could lie, or be mistaken, or be a fucking inept retard!).
So this poster makes the four thousand leaps of faith from typing error to widespread corruption, and gets modded insightful.
Riiiiiiiiiiiiiiight.
Finally someone who is reading with a critical eye. A $251 million dollar typo? I think not. A $12 million dollar paper loss? Considering that they don't plan on selling the stock, their unrealized profit or loss is rather speculative.
Not knowing all the facts of the case, I'm not willing to jump into the premise that there is a larger multi-corporation conspiracy involving Merrill Lynch but it is almost certain that the Taiwanese trading firm is not telling the truth and that this is a cover story.
Just goes to show how guilable people are. Tell them any old story--no matter how ridiculous--and not only will they believe it, but they will also defend it.
Now, as for the claim that "most of what is written about the financial markets is fraudulent in some way" -- you care to back that up? Because thats a statement with almost no content other than a manipulative intent to induce the reader to distrust what is written about the markets. Even if the fraud tally is "billions of dollars", that is a small fraction of the overall market size and furthermore, your claim wasn't about fraudulent market activity but rather fraudulent writings concerning market activity. Which is all very confusing.
I think caution should be taken when extrapolating from a single instance of what _appears_ to be a non-truth. The fact that a given firm is making dubious claims does not necessarily imply or play into larger conspiracy themes.